TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 223
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....aised by the revenue, in short, reckons to primarily two issues which have been raised by the counsel for the revenue: (1) in the assessment year 2005-06 the assessee returned/refunded an amount of Rs. 83,73,040/- and to the extent of cash payments the amount was disallowed and added at Rs. 21,51,100/- to various students and Rs. 3,01,16,173/- in the assessment year 2008-09 and to the extent of cash payments the amount @ 20% was disallowed and added at Rs. 18,19, 487/-. (2) disallowance of interest to the extent of Rs. 8,03,702/- in the assessment year 2005-06 and Rs. 5,80,080/- in the assessment year 2008-09 by holding that the assessee advanced interest free loans/advances to friends and relatives, diverted the funds for non-business purposes and thus the interest paid was not allowable. 4. While the Assessing Officer (AO) while holding that the refund of the tuition fee as aforesaid was not verifiable with reference to the amounts refunded to the respective students and to the extent of amounts having been paid by cheques, the AO allowed the same, but insofar as the tuition fee which was refunded by cash, since the same being not verifiable, the amount stood disallowed. During ....
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.... fee was refunded to various students and to the extent of the amounts having been paid by cheques/drafts and to the extent the assessee was able to lead evidence, the amount was already allowed by the AO himself at the assessment stage. However, insofar as cash payments are concerned, the assessee was unable to lead evidence and as to why cash was required to be paid to the students when major amount was paid by cheques, and no material was placed on record in this regard. She also contended that' the receipts produced before the AO were doubtful in nature and the receipts did not inspire confidence and thus, the AO was . well justified in making a disallowance/addition only to the extent the assessee was unable to satisfy. She further contended that both the appellate authorities have not considered the issue in the right perspective and no case was made out by the assessee for deletion of the amount which was rightly made by the AO. Secondly, insofar as the issue of interest is concerned she contended that the assessee on the one hand took huge loans from bank on which he was paying interest but on the contrary he advanced loan without interest to friends and relatives which....
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....erse reasons may not be interested in pursuing with the coaching or opted to have a chance in a different institute and the AO in the assessment year 2005-06 noticed that 497 students opted for refund of fee out of which 175 students were paid refunds in cash amounting to Rs. 21,51,100/-. The AO directed for providing material, basis and evidence with regard to refund of fee to the students on account of doubt as the amount had been refunded by cash to the extent of Rs. 21,51,100/-. Though the AO made enquiries on his own under Section 133(6) of the Act from about seven students/(parents), and in the cases of seven students either notice sent was returned back by the postal authorities for want of complete address or the said persons were not available on the address provided by the assessee. In addition to the seven students as aforesaid, there was a denial by parents of four other students about non receipt of refund and drawing inference, the AO disallowed the entire repayment of the amount by cash. Some additional material/evidence was placed by the assessee before the CIT(A) as it was noticed that adequate opportunity was not granted by the AO. The CIT(A) admitted the addition....
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.... and placed on record by the assessee, came to the conclusion that the disallowance is required to be made only to the extent of Rs. 2,50,000/-. This was also upheld by the Tribunal on a further appeal by both the sides. Therefore, when both the appellate authorities have upheld ad hoc addition, therefore, in our view, when estimate has been made even by the AO, it was partly modified by the first appellate authority and upheld by the Tribunal, is also based on appreciation of evidence and is thus a finding of fact and no substantial question of law can be said to arise in this year as well. 12. As far as the disallowance of interest is concerned, admittedly the assessee had an opening capital of Rs. 5,70,74,967/- of his own and the advances, if at all, being interest free, is to the extent of Rs. 98,93,950/- which is far below the capital of the assessee and, therefore, the Tribunal has rightly come to the conclusion that to the extent of his own capital the assessee could advance money without interest for business expediency or/and relatives, and none can be forced to charge interest. It is also noticed by the lower authorities that assessee earned bank interest to the extent o....